Ch5 Flashcards
1
Q
Elasticity
A
A measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants
2
Q
Price elasticity of demand
A
A measure of how much the quantity demanded of a good responds to a change in the price of that good. Percentage change in quantity demanded divided by the percentage change in price.
3
Q
What are the 5 determinants of the price elasticity of demand?
A
- Availability of close substitutes
- Necessities versus luxuries (necessities are in elastic)
- Definition of the market
- Time horizon
- Size of expenditure in the budget
4
Q
If elasticity is more than one, demand is (elastic/I elastic/ unit elasticity)
A
Demand is Elastic
5
Q
Total expenditure / total revenue
A
The amount received by sellers of a good, computed as the price of the good times the quantity sold. P x Q
